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China's Path to World Power

Comment

For decades, before a heedless congregation, some of us have preached the old Hamiltonian gospel.

Great nations do not have trade partners. They have trade competitors and rivals. Trade surpluses are superior to trade deficits. Tariffs on foreign goods are preferable to taxes on U.S. producers. Manufacturing, not finance, is the muscle of the nation.

Economic independence is vital to political independence.

Following Hamiltonian precepts, the United States grew from 13 rural and agricultural colonies into the greatest industrial power in all history, producing 42 percent of the world's manufactured goods. We were the awe and envy of mankind, the self-sufficient republic, maker of half of the armaments produced by all the nations in World War II.

That is the America we grew up in — that has now vanished.

Chrysler, Ford, perhaps GM, may be dying. Manufacturing has sunk to 10 percent of U.S. employment, a level unseen since before the Civil War. Europeans and Asians are to assemble in Washington this week to impose upon the United States a New World Economic Order like the one we imposed on them at Bretton Woods in 1944.

Such are the fruits of free-trade ideology.

Across the Pacific, a nation that studied how America rose, and watched as America declined, chose a different path. China adopted and pursued a China First policy of economic nationalism.

In July, Charles McMillion of MBG Services testified to the U.S-China Economic and Security Review Commission on China's progress.

Beijing began its astonishing rise by devaluing its currency 45 percent in 1994, slashing the prices of exports in half and making imports twice as expensive. As America threw open her market and invited China to come in and capture it, China had erected a Great Wall around her own.

Results: China's worldwide trade surplus in manufactures, $31 billion in 2001, hit $401 billion in 2007, a 1,300 percent increase, and may reach $500 billion in 2008. China has shoved Germany aside to become the world's greatest exporter and now leads the world in the export of manufactured goods to Japan and the European Union, as well as the United States.

While running trade deficits with Asian neighbors like Taiwan, to tie them politically to Beijing, China is running record trade surpluses with the European Union and the United States, making America and the West as dependent upon China for our manufactures as we are on OPEC for our oil.

Chinese auto production has quintupled since 2001.

She now produces more cars than Germany and may exceed the United States in 2009. While Chinese auto exports are still heavily in parts, finished cars are coming soon to a dealer near you. The Chinese will likely run the sword through the last standing member of America's Big Three.

Before 2004, China's manufacturing trade surplus with America was largely in textiles and apparel. But, since then, China's rocketing trade surplus in electronics, computers and parts has far exceeded her surplus in textiles and apparel.

China's trade surplus in computers and components rose from $8.1 billion in 2001 to $73.5 billion in 2007. In cellular phones and parts, her worldwide trade surplus grew from $3 billion in 2003 to $50 billion in 2007, and may reach $60 billion by year's end.

China still imports commercial airliners. But she now has a large and growing trade surplus in airplane parts. This follows the pattern in textiles, computers and autos. First, the Chinese learn by assembling parts in factories in China. Then, China begins to produce the parts. Then, China produces the finished products and goes out to capture the world market, while protecting her own by keeping her currency cheap.

On items the Commerce Department categorizes as advanced technology products, America began running a trade deficit for the first time early in the George W. Bush years. China now exports to us four times as much, in dollar value, in ATP items as we sell to Beijing.

As America mothballs the shuttle, relying on Russian rockets to get our astronauts back up to a space station we built, China is putting men into space and heading for the moon.

Since America ushered China into the World Trade Organization in 2002, Beijing's growth rate has been four times that of the United States, accelerating from an average 10 percent of gross domestic product to 12 percent in 2007.

With her immense trade surpluses, China's reserves have surged from $200 billion in 2002 to $2 trillion. Awash in dollars, Beijing now waits patiently, writes McMillion, to cherry-pick the crown jewels of America's industrial empire — "patents, talents, natural resources, brands" — at fire-sale prices in the global crash.

As America plunges into recession and our industry hollows out, while China is still growing at 9 percent, as the 20th century's greatest creditor nation now borrows from Beijing to pay for booster shots for its sick economy, may we hear once again the Bush-Clinton refrain about how the terrible danger we all face is from "protectionism."

Patrick Buchanan is the author of the new book "Churchill, Hitler and 'The Unnecessary War." To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2008 CREATORS SYNDICATE INC.



Comments

7 Comments | Post Comment
Sir;... If you could only know how retarded you sound extolling the virtues of a managed economy while sitting amid the rubble of our failed anarchy of an economy you would hold your head between your knees and sob your life away... Think of how these politicians made hay on calling Mr. Obama Socialistic when everyone except your favorite Know nothings realized it is Socialist money keeping our whole government and economy from outright bankruptcy... What if the commies pulled the rug out from under us??? Do you think our government could get by without being reformed??? The fact is, that if our government has allowed this situation to come about because it relied upon the good will of strangers rather than the pure common sense of economy, then it needs to be reformed... There is no economy to our economy... Look at the word: Oikonomos= Manager, from Oikos, house plus nemein, distribute... Every household had to live upon its own produce, to distribute with some fairness what was produced. Just as ancient people could not fudge the numbers when the numbers actually represented the needs of life, we should understand that there is not the slightest sugar in our fudged numbers... If we are consuming more than we produce, and exporting our productive capacity, and living on borrowed money to buy from abroad what we once produced for ourselves; then there is no management. And questions of international relations having the answer of whether or not we survive as a nation should not be left only to self interest and greed to work out between them...We are getting a lesson here, and I will spell it out for the dim wits.... Every economy has to work just as every houshold once worked, within itself... If we give to the capitalist class, which is an international class holding no national allegiance before their class allegiance, -the sole control of our economy; we can expect no better than they have given to the whole world, which is a tyranny of economy and state, grinding the hopes of mankind into oblivion. We can have anything we want from our economy, but if we do not manage it we will not even get our needs met... Now, you look... What can we really produce for our own defense??? We can feed ourselves... Can we clothe ourselves??? Do we have a merchant marine??? Do we own our own oil tankers, and do they pay taxes in this land??? If business says something is good for them, it is because it is bad for us... We need to govern our affairs, and not on a lark, but because we cannot know that international capital has one part of our interest at heart, and we have every evidence that they would rather see this land of democracy humiliated and blind, with cup in hand, begging for change than standing tall for freedom...Thanks...Sweeney
Comment: #1
Posted by: James A, Sweeney
Tue Nov 11, 2008 11:30 AM
Again, a great article. People like to throw around socialism and communism as if they actually understood what those words mean. I firmly believe in a free market, but that market has become one of "get it while you can and get out". China refused to place an accurate value on the yuan and the world let them when they were exporting more than anyone else.
When Radio flyer decided to manufacture in China that really brought home the simple fact that we cannot compete in the world market anymore. Protectionism is a better policy than a world depression because China refuses to values is money correctly.
f
Comment: #2
Posted by: Frank
Tue Nov 11, 2008 2:28 PM
Re: Frank;... Jeez Frank, Just read English history... It does not matter if it is about Marx, or Henry number seven... There are some rules of economy that are dangerous, and ultimately disasterous to ignore.... You need to be a market for your own goods... You need to export, and at a minimum, export more than you import... You cannot export all your capital, and all of your productive capacity... And you cannot support wars for no gain all over the planet... To hell with glory... Wars ruin more economies than they rescue... If you want to beat a foreign power, undercut their markets... The thing Lenin said is true, about a capitalist selling the rope that will hang him... We will be ruined with exported capital, and exported production, which is the last thing you actually want to export because it ruins your market, and if every country is self sufficient you are going to end with world socialism anyway... Sure, the capitalist makes a quick profit on production from abroad until the wealth of the country is drained off, but once that happens, everyone goes broke... We cannot all live on the profits of the rich... We need the wealth produced by our own economy, or we can kiss world power good bye.... Not that I would mind that, but if we are not a power, then we become a prize...Thanks...Sweeney
Comment: #3
Posted by: James A, Sweeney
Tue Nov 11, 2008 7:31 PM
Well, Byuke, you old bloodhound, you seem to have sniffed out a new trail. Hang on to it for a while. But don't forget to credit the Republican Party with the coups de grace. You know what I mean: The move from a budget surplus at the end of the Clinton presidency to the biggest rack of debt this country has ever seen came right at the hands of your very own. The Chinese own us and will surely be financing Chinese language studies as a required subject in all of our grammar schools as a condition for bailing us out. And all that thanks to the party of "conservatives" who spent us into the greatest catastrophe we have yet seen in our sweet, short history, heretofore undamaged as it is now by the most breathtaking incompetence in leadership we have ever seen. Cheers to you and watch out for skunks.
Comment: #4
Posted by: Masako
Tue Nov 11, 2008 11:10 PM
Re: Masako;... Ya! What you said: SKUNKS.... You watch some of those bums on tv and you feel like you need a bath... If they can slime up America so much on the outside, imagine what they must be like inside...Thanks...Sweeney
Comment: #5
Posted by: James A, Sweeney
Wed Nov 12, 2008 6:11 AM
Re: James A, Sweeney: What's the latest formula? Throw a bunch of tomato juice on and scrub vigorously, I think it is. After about six months the unlucky creature who could not avoid the spray will be smelling like a rose...

Cheers. Masako
Comment: #6
Posted by: Masako
Wed Nov 12, 2008 7:57 PM
Pat is absolutely right, but I am confused as to why our politicians and many members of our society think that free trade is so righteous and good. It is strange. I guess everyone wants cheap goods until their job is eliminated and then they can no longer purchase even the cheap goods. At the same time, if America goes down, who is going to buy all the junk that is produced in China?

One more point. With all this turmoil, I want to mention an interesting idea by philosopher Alfred Glaser. He said that there were problems with both communism and capitalism, but that to combine both would be ideal. Namely, allow capitalism to go on as much as it wants as long as it is taxed to the extent that it can provide the basics to all the members of society. Ie. food, shelter, clothing, medical, education. He recommended two currencies. One a survival currency to provide the basics to everybody and another which he called a pleasure currency which would be for capitalism. He said to tax the pleasure currency to the extent that it provides enough survival currency to everybody. This way you get the best of both systems and you remove the fear and conflict from society. He didn't mention it, but dropping Free Trade might be a good start to getting the house in order.
Comment: #7
Posted by: Bob Dobbs
Thu Nov 13, 2008 9:23 PM
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